18 THE SOCIAL NETWORK
AN UNCERTAIN FUTURE
Patrick Mooney, editor of Housing, Management & Maintenance
Patrick Mooney explores how contrasting news on planning approvals, new homes and public fi nances are providing a confused picture of the future housing market.
I
n many respects the housing market was remarkably unaffected by the Covid pan- demic, with strong demand fuelling higher prices, as buyers competed to take advantage of stamp duty savings, historically low interest rates and a plentiful supply of mortgages. But will the cash-rich volume housebuilders be able and willing to plug the growing gaps within public fi nances that are threatening to undermine future growth in the market? Already, in ation and interest rates are edging upwards amid talk of a cost of living crisis (fuel and energy price rises leading the way), and the situation in eastern Europe is bound to create uncertainty and possibly lead to a price correction, or at least a cooling in market conditions.
PROPERTY DEVELOPERS WHO WANT PLANNING PERMISSION FOR MAJOR HOUSE BUILDING PROJECTS COULD FACE A NEW TEST
BEING IMPOSED BY LOCAL COUNCILS
WWW.HBDONLINE.CO.UK
Last year we saw planning approvals for new homes bounce back to one of their highest totals in the past 15 years, and property companies have been reporting bumper profi ts on the back of record house price levels. Britain’s biggest housebuilder, Persimmon, recently announced its profi ts for 2021 jumped by nearly a quarter to 0m due to “positive pricing conditions” in every region in which it operated. Vistry announced it had more than tripled its annual profi ts to 20m, while back in March the Halifax reported that prices were rising at their fastest rate since 200 with the average house price hitting a record high of 2,12.
PLANNING PERMISSIONS BOUNCE BACK Sector analysis by real estate debt advisory specialists, Sirius Property Finance, has shown that while the level of new homes being granted planning permission dipped during the fi rst year of the pandemic, this negative trend reversed in 2021 with the third highest annual total of approvals seen since 200. ver the last year a total of 1,000 new residential homes were granted planning permission, an eight per cent annual increase on the 2,000 fi gure in the previous year and the third highest annual total since 200. London looks set to see the biggest boost to new home stock levels (if the approvals are built), with planning permission granted for 60,200 new residential units over the last year, accounting for 19 per cent of the total. The
South East saw the second highest level with permission for 6,00 new homes, the orth West saw permission granted for over 0,000 new homes, but in the orth ast, just 1,00 planning applications were granted. However, this rosy picture on approvals could be jeopardised by the severe hits that public fi nances have taken, with local govern- ment suffering the most severe Covid related cuts to their income. This followed a year of austerity cuts, and could in fact damage the planned infrastructure improvements upon which many large housing developments are reliant.
In the capital, Transport for London’s
fi nances have taken a battering as a result of passenger numbers falling through the oor since arch 2020. his is threatening planned investments which are vital for creating new homes and jobs, across London and the wider South East. Examples of these are set out below.
The planned Bakerloo Line extension, with its 2,000 new homes and 1,000 jobs, has already been put on hold due to lack of Government funds, as has the development of up to 200,000 new homes across ondon and the outh ast that rossrail 2 was expected to spawn.
In addition, work on the Docklands Light Railway extension to Thamesmead has been delayed, leading to uncertainty for 20,000 new homes and the creation of ,000 jobs. A further 6,000 homes planned for olindale station in Barnet are also believed to be in doubt. Similar delays and hold ups are being discussed across other urban conurbations throughout the country, with local authorities unable to fi ll the huge funding gaps that have appeared in housing budgets. It is unlikely Homes England can replace all of the missing funds, which is why the volume developers are likely to be asked to cough up and forego some of their profi ts.
LEVELLING UP
A further complication for developers may come in the shape of a “health test” for the new programme of Levelling Up schemes. This is a new policy area for the Government but could see signifi cant changes in how billions
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